How to Start an Online Business in Canada in 2026: Registration, Sales Tax, Consumer Rules and Costs

An online business is the easiest kind to start in Canada and one of the easiest to get wrong. You can open a store on a weekend, but once orders arrive from Vancouver, Moncton and Montreal you're dealing with several sales tax rates, a provincial sales tax you might have to collect from another province, consumer laws on refunds and delivery, and federal rules on pricing and email marketing. This guide walks through each piece in the order you'll meet it — choosing a model, registering, charging the right tax, selling and marketing legally — with Canadian dollar examples and the 2025–2026 changes that matter.

Quick answer

To start an online business in Canada, pick a model (your own store, marketplaces, dropshipping, digital products or services), register a trade name with your province if you're not using your own name, and get a free CRA Business Number when you open a GST/HST account. Once taxable sales pass C$30,000, charge GST/HST at the rate of the province you deliver to. Follow provincial online-sale rules, show all-in prices, and get consent before marketing emails.

• No national licence to sell online — check your city's home business rules

• GST/HST follows the delivery address: 5% to Alberta, 13% to Ontario, 15% to most of Atlantic Canada

• BC PST registration for out-of-province sellers above C$10,000 of BC sales

• Ontario: disclose itemized price, taxes and shipping; send a copy within 15 days

• Drip pricing is illegal — only government taxes can be added at checkout

Choose your online business model

The model you choose shapes your margins, your tax obligations and how much risk you carry. Most Canadian online sellers combine two or three.

Online business models compared

	Own online store	Marketplaces	Dropshipping	Digital products	Online services
Start-up cost	Low–medium	Low	Low	Low	Very low
Margin	Highest	Lower after fees	Thin	High	High (your time)
Inventory	Yours	Yours (or platform warehouse)	Supplier's	None	None
Main risk	Getting traffic	Platform rules and fees	Supplier quality, delivery delays	Piracy, refunds	Capacity
Tax complexity	Medium	Medium — platforms may collect some tax	Medium–high (imports)	Medium (place of supply)	Medium

Start-up cost

Own online store

Low–medium

Marketplaces

Low

Dropshipping

Low

Digital products

Low

Online services

Very low

Margin

Own online store

Highest

Marketplaces

Lower after fees

Dropshipping

Thin

Digital products

High

Online services

High (your time)

Inventory

Own online store

Yours

Marketplaces

Yours (or platform warehouse)

Dropshipping

Supplier's

Digital products

None

Online services

None

Main risk

Own online store

Getting traffic

Marketplaces

Platform rules and fees

Dropshipping

Supplier quality, delivery delays

Digital products

Piracy, refunds

Online services

Capacity

Tax complexity

Own online store

Medium

Marketplaces

Medium — platforms may collect some tax

Dropshipping

Medium–high (imports)

Digital products

Medium (place of supply)

Online services

Medium

Your own store on a hosted e-commerce platform gives you the customer relationship and the best margins, but you have to bring the traffic. Marketplaces bring buyers at the cost of referral and fulfilment fees — run a product through our marketplace profit calculator before you list it. Dropshipping avoids inventory but hands control of quality and delivery times to a supplier, often overseas, and Canadian consumer law still treats you as the seller. Digital products (templates, courses, e-books) and online services (design, bookkeeping, tutoring) have no shipping at all but come with their own GST/HST place-of-supply rules.

Whatever you pick, test demand before you buy stock. A small first order, a pre-sale, or a simple landing page that collects email sign-ups (with consent — see CASL below) will tell you more than a business plan.

Register your online business

An online business registers like any other Canadian business; the full walkthrough is in our guide to starting a business in Canada. The short version:

1. Pick a structure. Most online sellers start as sole proprietors and report profit on Form T2125 with their personal return. Incorporate if you carry real product liability, take investment, or leave profits in the business.
2. Register your name with your province if it isn't your own legal name — C$60 in Ontario, C$40 plus a C$30 Name Request in BC, C$10.30 plus a registry agent's fee in Alberta. You register where you're based, not where customers live.
3. Get a CRA Business Number through Business Registration Online when you open your first program account. It's free, issued instantly, and since 3 November 2025 new registrations are online only.

A domain name is not a business name registration. Owning northernloom.ca gives you no right to trade as "Northern Loom" — you still need the provincial registration, and you should search the federal trademarks database before you invest in a brand. Payment processors and marketplaces will ask for your legal name, registration and Business Number when you open a seller account, so register first.

Online sellers working from home also fall under municipal home-based business rules. Most cities allow an online store run from a spare room, but some require a home occupation licence, and storing stock or receiving courier pickups can trigger limits. Search your activity on BizPaL.

GST/HST: the rate follows the customer

You don't have to register for GST/HST while you're a small supplier — worldwide taxable sales of C$30,000 or less over four consecutive calendar quarters. Pass it in one quarter and you must charge tax from the sale that takes you over; pass it over four quarters and you have until the end of the following month. Either way you have about 29 days to register. Marketplace and platform sales count towards your total.

Once registered, the key rule for online sellers is place of supply. For goods you ship, the province where the goods are delivered decides the rate — not where your business is. The CRA's own example: a Winnipeg store that ships a laptop to a customer in Halifax charges Nova Scotia's 14% HST. If the customer picks it up in Winnipeg, Manitoba rules apply.

Worked example — a Calgary candle maker. Jordan sells C$40 candle sets through her own store and ships across Canada. She passed C$30,000 last spring and is now registered. An order to Edmonton is charged C$40 + 5% = C$42.00. The same set shipped to Toronto carries 13% HST: C$45.20. To Halifax it's 14%: C$45.60. Shipping charges follow the same rate as the goods. Most e-commerce platforms can calculate this automatically from the delivery address, but you're responsible if the settings are wrong — check them against our GST/HST rates by province table.

Try it — HST on a C$40 order shipped to Ontario

Add TaxRemove Tax

AmountTax Rate

5% GST (AB, NT, NU, YT)13% HST (ON)14% HST (NS)15% HST (NB, NL, PE)11% GST+PST (SK)12% GST+PST (BC, MB)14.975% GST+QST (QC)

Net Amount (Before Tax)$40.00

Tax (13%)$5.20

Gross Amount (Including Tax)$45.20

Open the full GST/HST Calculator (PDF, save, compare)

Digital products and services have their own place-of-supply rules (often based on the customer's address), which the CRA explains in its GST/HST place-of-supply guidance. Non-resident sellers and platforms selling into Canada register under the simplified digital-economy rules once their Canadian sales pass C$30,000 in 12 months.

Provincial sales tax when you sell into other provinces

Charging GST is only half of it for orders going to the four provinces with their own sales tax. British Columbia requires Canadian sellers located outside BC to register and collect PST once their gross revenue from taxable sales to BC customers exceeds C$10,000 over the previous 12 months. Saskatchewan, Manitoba and Quebec each have their own registration rules for out-of-province sellers, with different thresholds and definitions. If you're based in one of those provinces, you register for its sales tax at home too — see our guides to BC PST, Saskatchewan PST, Manitoba RST and Quebec QST.

Worked example — when BC PST kicks in. An Ontario seller ships about C$900 a month of taxable home décor to BC. After 12 months that's C$10,800 — over the C$10,000 line — so she must register with BC and add 7% PST to future BC orders on top of 5% GST. Watch the numbers each month: a few large orders from one province can push you over a threshold faster than you expect.

Consumer protection rules for online sales

Each province has its own consumer protection law covering online ("internet" or "distance") sales. They share common features — clear pre-sale disclosure, a copy of the contract, cancellation rights when the seller doesn't comply, and refund deadlines — but the details differ, so check the law in each province you sell into. Ontario's rules are a good benchmark because most Canadian sellers ship there.

Under Ontario's Consumer Protection Act, 2002, an online transaction over C$50 where either you or the buyer is in Ontario must follow these steps:

Ontario internet agreement checklist

0/6

• Before the order: your business name and contact details, a fair description of the goods or services, an itemized price including taxes and shipping, the total, payment terms and delivery date
• Give the buyer an express chance to accept or decline and to correct errors before they pay
• Send a copy of the agreement they can view, save and print within 15 days
• Deliver within 30 days of the promised date unless the buyer agrees to a delay
• Refund within 15 days of a valid cancellation
• Publish a clear returns and refund policy

Share Print

If you skip the disclosure or the chance to correct errors, Community Legal Education Ontario explains that the buyer can cancel up to 7 days after receiving the copy; if the copy is late or incomplete, they can cancel up to 30 days after the agreement. Buyers who cancel generally have to return goods within 15 days.

Ontario has passed a new Consumer Protection Act, 2023, which will replace the 2002 Act and regroup online, remote and other contracts under common rules. It takes effect only when proclaimed, and the province had not set a date at the time of writing — check before you rely on the current rules.

Pricing, reviews and the Competition Act

The federal Competition Act applies to every price you advertise. Drip pricing — showing a low price and then adding mandatory fees at checkout — is expressly prohibited. The only charges you can leave out of the advertised price are those imposed by government on the buyer, such as GST/HST and PST. A mandatory "service fee", "handling fee" or "platform fee" must be in the headline price; the Competition Bureau warns that even variable fees can raise concerns, and that consumers shouldn't have to scroll or read fine print to find the real total.

Enforcement isn't aimed only at large companies, and penalties under the civil deceptive marketing provisions are steep. Keep three habits from day one: show the total price you'll actually charge (shipping can be separate if it's clearly shown before checkout), make sure "was" prices and "sale" claims are genuine, and never post or buy fake reviews or hide negative ones.

Privacy and email marketing

Privacy. An online store collects names, addresses, emails and order histories, which makes it subject to privacy law. The federal Personal Information Protection and Electronic Documents Act (PIPEDA) covers private-sector businesses collecting personal information in commercial activity, except within Alberta, BC and Quebec, which have their own substantially similar laws (PIPEDA still applies to information crossing borders). Its ten principles boil down to: be accountable, say why you collect data, get consent, collect only what you need, keep it accurate and secure, be open about your practices, and let people see and challenge what you hold. Publish a plain-language privacy policy and limit staff and app access to customer data.

Email and text marketing. Canada's Anti-Spam Legislation (CASL) requires consent before you send a commercial electronic message. Express consent (a customer ticks a box to join your list) lasts until they unsubscribe. Implied consent from an existing business relationship is temporary — for former customers it lasts two years from their last purchase. Every message must identify you, include your contact details, and contain a working unsubscribe link. You also can't email people to ask for consent. The CRTC can impose penalties of up to C$1 million for individuals and C$10 million for businesses per violation, so use an email platform with double opt-in and keep consent records.

Shipping, imports and dropshipping

Your shipping promises are contract terms, so state delivery times you can actually meet — especially if a supplier ships from overseas. Show shipping costs before checkout, and price for the real cost of packaging and returns, not just the label.

If you import stock commercially, you need an import-export (RM) account on your Business Number. Since 21 October 2024 these accounts have been administered by the Canada Border Services Agency through its CARM portal, where importers declare goods and pay duties and taxes. In a dropshipping arrangement, check who the importer of record is: if parcels arrive in your customers' names with duties to pay on delivery, expect complaints and refund requests.

Imported products also have to meet Canadian rules — consumer product safety requirements, bilingual labelling for many prepackaged goods, and specific regimes for cosmetics, natural health products, children's products and food. If you plan to sell food online, read our guide to home-based food businesses, because shipping food across provincial borders can require a federal licence.

Recent changes that affect online sellers

1 Jul 2021

GST/HST digital-economy rules for non-resident sellers and platforms (threshold C$30,000)

1 Jan 2024

Digital platform operators start collecting seller data for CRA reporting

21 Oct 2024

Import-export (RM) accounts move to CBSA administration under CARM

31 Jan 2025

First platform reports on sellers due to the CRA

3 Nov 2025

CRA Business Number registration goes online only

Getting paid, records and income tax

Open a separate business bank account and connect only that account to your store, marketplace and payment processor. Processors and marketplaces commonly hold back part of a new seller's payouts as a reserve against refunds and chargebacks, so don't count on cash from your first sales arriving straight away. Answer chargeback disputes quickly and keep proof of delivery: a tracking number and a delivery confirmation are usually your best evidence.

Your profit is taxable income from your first sale. Sole proprietors report it on Form T2125, and selling through a marketplace doesn't change that. Since the 2024 calendar year, the CRA has required digital platform operators — including marketplaces that let sellers sell goods or offer services in Canada — to report sellers' names, addresses, tax numbers and the payments made to them each year, with the first returns due by 31 January 2025. Assume the CRA can see your platform income, and make sure your own records match it.

Keep every invoice, receipt, platform payout report and shipping record for at least six years — the CRA's standard retention period — in a form you can produce on request. Accounting software that imports transactions from your store and bank feeds makes the GST/HST return far easier, especially once you're charging several provincial rates. If you register for GST/HST, you can also claim input tax credits on platform fees, packaging, shipping and equipment, which is one reason many online sellers register voluntarily before they reach C$30,000.

How much does it cost to start an online business in Canada?

Government fees are low; the real costs depend on your model. The figures below are estimates for a small online store selling physical products, based on typical published prices for hosted e-commerce plans, domains and supplies in 2026.

Card fees add up: on C$60,000 of sales at 2.9% plus C$0.30 per order, with 1,500 orders, processing costs about C$2,190 a year. Check yours with the payment fee calculator and build the whole budget in the startup cost calculator.

Common mistakes when starting an online business

• Charging your home province's tax on every order. GST/HST follows the delivery province.
• Forgetting BC PST. Out-of-province sellers above C$10,000 of BC sales must register.
• Adding fees at checkout. Mandatory fees belong in the advertised price.
• Vague delivery times. Promise dates you can meet; late delivery gives Ontario buyers cancellation rights.
• Buying an email list. Without consent, every message breaches CASL.
• Treating the domain as the business name. Register the name with your province and check trademarks.
• Ignoring product rules. Imported goods must meet Canadian safety and labelling requirements.

Official links

• CRA — Which GST/HST rate to charge
• CRA — When to register for GST/HST
• CRA — Business Registration Online
• Ontario — Safe online shopping
• Competition Bureau — Drip pricing
• Privacy Commissioner — PIPEDA in brief
• BizPaL — permits and licences

What to do next

Pick your model and test demand with a small first batch. Register your name, set up your store's tax settings by delivery province, and write your shipping, returns and privacy policies before launch. Our guides to GST/HST registration and starting a business in Canada cover the next steps, and the free invoice generator handles B2B orders with tax lines.

This is general information, not legal or tax advice — confirm on the official source or with a professional.

Frequently asked questions

Do I need a business licence to sell online in Canada?

There's no national licence for online selling. You register a trade name with your province if you don't use your own name, get a free CRA Business Number when you open a GST/HST or payroll account, and check your municipality's home-based business rules — some cities license home businesses, others don't. Regulated products such as food, cosmetics, health products or alcohol bring their own permits.

Do I have to charge GST/HST on online sales?

Only once you're registered. You can stay unregistered while worldwide taxable sales are C$30,000 or less over four consecutive quarters. After that you charge GST/HST based on where the goods are delivered: 5% GST to Alberta, 13% HST to Ontario, 15% to most Atlantic provinces. Registering voluntarily lets you claim back tax on start-up costs.

Do I need to collect BC PST if I sell online from another province?

Possibly. BC requires Canadian sellers outside the province to register and collect PST once their gross revenue from sales of taxable goods and services to BC customers passes C$10,000 over 12 months. Saskatchewan, Manitoba and Quebec have their own registration rules for out-of-province sellers, so check each province you ship to.

What rules apply to online sales to Ontario customers?

For online contracts over C$50 with an Ontario buyer or seller, Ontario's Consumer Protection Act requires you to disclose your contact details, a description, an itemized price including taxes and shipping, and delivery terms before the order; let the customer accept, decline or correct errors; and give them a copy within 15 days. If you don't, the customer may be able to cancel and you must refund within 15 days.

Can I send marketing emails to my customers?

Only with consent. Canada's Anti-Spam Legislation requires express or implied consent before you send commercial electronic messages, plus your identification and a working unsubscribe link in every message. Implied consent from a past purchase lasts two years. The CRTC can fine individuals up to C$1 million and businesses up to C$10 million per violation.

Is dropshipping legal in Canada?

Yes. Dropshipping is legal, but you are still the seller: you must charge GST/HST correctly once registered, honour provincial consumer protection rules on delivery and refunds, advertise attainable prices under the Competition Act, and make sure products meet Canadian safety and labelling rules. If you're the importer of record, you also need a CBSA import account.

Sources & verification

Figures on this page were checked against the sources below when it was last reviewed on 13 October 2026. Each rate and limit is stored once with its own official source and review date, and official update channels are monitored daily so changes are picked up. How we verify

1. 1.Charge and collect the tax — Which rate to charge — Canada Revenue Agency · accessed 13 October 2026
2. 2.When to register for and start charging the GST/HST — Canada Revenue Agency · accessed 13 October 2026
3. 3.Safe online shopping — Government of Ontario · accessed 13 October 2026
4. 4.Your rights under the Consumer Protection Act — Government of Ontario · accessed 13 October 2026
5. 5.Online, telephone and mail-order shopping — Community Legal Education Ontario (CLEO) · accessed 13 October 2026
6. 6.Bill 142, Better for Consumers, Better for Businesses Act, 2023 — Legislative Assembly of Ontario · accessed 13 October 2026
7. 7.Drip pricing — Competition Bureau Canada · accessed 13 October 2026
8. 8.PIPEDA in brief — Office of the Privacy Commissioner of Canada · accessed 13 October 2026
9. 9.Canada's anti-spam legislation: Your questions answered — BDC (Business Development Bank of Canada) · accessed 13 October 2026
10. 10.Operating a digital platform? Reporting Rules for Digital Platform Operators — Canada Revenue Agency · accessed 13 October 2026